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Saying “No Deal” to This New Deal
The marriage of American capitalism and democracy has always been a Pamela Anderson and Tommy Lee affair – stormy and erratic since its hasty wedding. But during the debate over a Wall Street bailout this week, we watched that matrimonial knot unwind into a tangled tale of terror.
As a financial crisis became a political panic, capitalism murdered democracy (ironically, while pursuing a vaguely socialist bailout). Only, unlike a typical horror story, the dead body wasn’t hidden, it was dumped in the nation’s public square.
The fiasco started, like most, with unreasonable demands. Under threat of financial meltdown, capitalism’s corporate lobbyists asked our democracy to forsake its usual deliberations and hand over $700 billion of taxpayer money in less than a week.
Many were surprised when democracy responded with such valiant defiance. As television screens split between the floors of the stock exchange and the House of Representatives, lawmakers initially voted with their constituents and against the bailout.
That’s when this husband-and-wife argument escalated into a grisly crime of passion.
CNN’s Ali Velshi frothed that “the banks and the companies don’t care about the intricacies” of democratic deliberations. A CEO angrily told CNN that “the money is being held hostage to the political process” – as if government resources are rightfully Wall Street’s. And as the Dow tanked, the Chamber of Commerce threatened retribution against recalcitrant lawmakers.
The final deathblow came from TINA, shorthand for “There Is No Alternative” – the motto that Margaret Thatcher used to peddle her corporatism, and that Washington and Wall Street used to promote theirs.
Whether it was a Barclays Capital executive telling reporters “there is no choice” or Rep. Joe Crowley, D-N.Y., insisting that “this needs to be done and it needs to be done right away,” responsibly democratic prescriptions were pulverized by capitalism’s deranged mantra of inevitability and urgency. To even mention, as economist Dean Baker did, that the taxpayer giveaway could exacerbate the crisis was to risk flogging by columnists like Tom Friedman. The sycophantic flat-earther vilified bailout opponents (i.e., most Americans) as mentally incapacitated deadbeats who “can’t balance their own checkbooks.”
By the time the fight hit Congress’ upper chamber, senatorial morticians were embalming democracy’s corpse. Sen. Harry Reid, D-Nev., permitted consideration of just one alternative, and he rigged parliamentary procedure to guarantee its defeat.
Yet, if capitalism took democracy’s life through a perverse legislative process, then it robbed its grave with the bailout bill’s substance.
American democracy is defined by vesting government power in systems and rules, not in individuals and whims. We have been, as John Adams wrote, “an empire of laws, and not of men” – until now.
Instead of responding to this meltdown by updating regulatory institutions or investing in job-creating infrastructure, the bailout proposes giving one unelected appointee – the Treasury Secretary – complete authority to dole out $700 billion to bank executives, with little oversight. And here’s the scary part: That lurch toward dictatorship was motivated not just by crony corruption, but also by a deeper ideological shift.
We now face market forces uninhibited by democratic governance – Chinese dictators and Saudi princes can move trillions of dollars without so much as a press release. This bailout, marketed as a speed enhancer, is an aggressive attempt to discard democracy’s checks and balances and pantomime that kind of autocracy.
While our political culture still required a public sales job (thus, the fearmongering), the bill’s czarism aims to permanently euthanize democracy in the name of improving our capitalism’s global agility. In that sense, this week’s spousal killing wasn’t random. It was the beginning of a systematic assault on our Constitution and a radical departure from Franklin Roosevelt’s original covenant – a dangerous “new deal” we must say “no deal” to.
ABOUT THIS AUTHOR
David Sirota, an In These Times senior editor and syndicated columnist, is a bestselling author whose book Back to Our Future: How the 1980s Explain the World We Live In Now—Our Culture, Our Politics, Our Everything was released in 2011. Sirota, whose previous books include The Uprising and Hostile Takeover, hosts the morning show on AM760 in Denver. E-mail him at ds@davidsirota.com or follow him on Twitter @davidsirota.
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Reader Comments
We face two problems immediately - how to restore the financial institutions funds needed for normal lending to business and consumers, and how to keep people who have trouble paying their mortgages in their homes. Why not bail out the homeowners, with a “housing voucher” program designed to make up the difference between an “affordable” payment and what they are contractually supposed to pay?
The mass of subprime homeowners - many minorities, almost all low or moderate income families - would be made secure in their homes. The lending organizations would have their capital restored as the “bad mortgages” became “good mortgages” with government-assisted repayments assured. People in trouble could apply to the housing voucher agency, submitting information on their family income based on their income tax forms and updated to allow for becoming unemployed or sudden burdens for health services. The agency could estimate an “affordable” amount for the family to pay on that basis, and write a voucher to make up the difference. There would be no “Wall Street bailout” but a bailout of low and moderate income homeowners, and the benefits would “trickle up” to the financial institutions immediately as their loans would be restored to full value.
The taxpayers could eventually be repaid if the terms of the mortgages were extended to include repayment of these advances. There would be no need suddenly spend $750 billion because the government’s spending on the vouchers would be spread over the duration of the mortgages, while the restoration of liquidity to the banks would be immediate and require no dubious attempt to value “toxic investments” for governmental purchase.
Actually, with a guarantee of government-supported payments, the government could require the interest on “subprime” loans to be renegotiated downward to the “prime” rate.
This emergency response to the “credit crisis” could be the first step in establishing a “right to housing” program, in which the government could subsidize new mortgages for low and moderate income families under restrictions to prevent abuses and excess interest. It could also take over the rental housing voucher program which now exists on a miserably underfunded level, since people whose jobs move may need rentals rather than home ownership. At the same time than financial institutions could be more carefully regulated so they don’t exploit the borrowers or encourage overcommitment.
Posted by allenbarton on Oct 3, 2008 at 2:05 PM
These are good ideas Allen, its so simple and obvious. What I like the most about it, is that we wouldn’t have had to add all that extra pork in order to cram it through, everyone wins.
I’m constantly amazed at how this government sees fit to award the benefits of socialism to the supposed champions of free market capitalism (ie, CEO’s gigantic companies, banks, what have you), but suddenly becomes deeply ideological when we talk about offering help to the average Joe. What are they so afraid of?
Anyway… now that we live in a post-bailout world, we’ll just have to sit and wait. My sense of this thing is that congress has only staved off the inevitable collapse of the whole show… which admittedly congress seems to be aware of… but I’ll be surprised if they can muster the political will to ever actually re-regulate the finance system. You need a swarm of lobbyists to ever move anything through congress, and the “average Joe lobby” isn’t all that powerful these days.
sigh.
Posted by diciteco on Oct 4, 2008 at 5:18 AM
Of course it’s too late now that the bailout got the rubber stamp, but I’ve got a question that I know Wall Street wouldn’t answer.
Why don’t they actually delve into the mortgages they hold, the toxic debt they claim they don’t know its worth, and sort the good mortgages from the bad?
The answer is that they were buying mortgages as investments rather than have any interest in managing the mortgages as banks used to do in the good old days (about a decade ago).
I would have told the banks to sort out their mortgages and either work with the owners of homes or take the loss. Bite the bullet Wall Street and take responsibility for the mortgages you bought.
But water under the table, the bailout is on.
A side note. There is/was an email going around claiming that if the $700 billion were to be distributed to all American adults then it would be about $350,000 per adult. Well, being a skeptic, I did the math. It actually would be $3,500 per adult. That’s still no small potatoes. Imagine what the economy would be like with a stimulus package like that?
Home owners could catch up on late payments, people could pay down debt, others would stick it in the bank, and many of course would go on a spending spree. Paying debt and mortgages or putting it into savings would end up freeing up the credit crisis as banks would have more money. The spending spree portion would stimulate the rest of the economy.
But Washington and Wall Street would never allow us to solve the economy using our money, we’re too dumb.
Posted by Jon B on Oct 4, 2008 at 6:52 AM
<blockquote>The marriage of American capitalism and democracy has always been a Pamela Anderson and Tommy Lee affair
Posted by scorp on Oct 5, 2008 at 9:54 AM
Ah Scorp,
Just as I predicted in another post, you returned to partis-insanely blame the Democrats. AND with repeated Republican talking points, which I’ve already heard numerous times.
So, let’s address the talking point concerning the Community Reinvestment Act. Show me the statistics of those helped and their foreclosure rate. Until you can do that, just stating a talking point you got somewhere else is nothing but propaganda AND a lack of skepticism on your part to any old talking point thrown your way.
Oh, and the scorp crew can’t wait to pick you up on election eve, we suspect with tears in your eyes.
Posted by Jon B on Oct 6, 2008 at 7:08 AM
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